Gold erases tepid recovery bounce to $1338 on broadly stronger USD

After an initial gap down opening, Gold attempted a tepid recovery to $1338 that got sold into and the yellow metal has now dropped back into negative territory to currently trade around $1332 region. 

Last week's US monthly employment report resurfaced expectations of an imminent Fed rate-hike later during this year and lifted the greenback sharply higher, eventually denting demand for dollar-denominated commodities - like gold.

Adding to this, a sharp decline in Chinese imports failed to provide any respite to the yellow metal. Moreover, upbeat sentiment surrounding equity markets is also driving investors away from traditional safe-haven assets and restricting any recovery for the precious metal. 

Going forward, in absence of any major economic releases on Monday, the precious metal might continue to derive its move from prevalent risk sentiment in equity markets and sentiment surrounding the greenback.

Technical levels to watch

From current levels, sustained weakness below $1330-28 immediate support is likely to drag the commodity back towards recent swing lows support near $1315-10 region, which if broken might turn it vulnerable to retest the very important $1305-1300 strong support area.

On the flip side, 20-day SMA near $1336-38 region now becomes immediate resistance to watch for, above which the metal could extend its recovery towards an important resistance near $1350-55 zone. Only a decisive move above $1350-55 resistance would negate any near-term bearish bias and pave way for further near-term up-move.